Virtual PPA Carbon Avoidance Cost Calculator

Determine how the VPPA price spread and avoided emissions translate into a cost per tonne of carbon avoided after adjusting for basis risk reserves.

Expected annual energy delivery from the VPPA project in megawatt-hours.
Contracted fixed price paid to the project per megawatt-hour.
Forecast hub price where the VPPA financially settles.
Difference between grid residual emissions and project-specific emissions.
Defaults to 0%. Apply a discount to net value to reflect basis and shaping risk reserves.

Scenario tool only; align with treasury, accounting, and sustainability teams before reporting externally.

Examples

  • 180,000 MWh, $39.50 strike, $33.20 hub, 0.62 tCO₂e/MWh, 12% discount ⇒ $1,012,896 adjusted net cost, $9.06/tCO₂e
  • 95,000 MWh, $31 strike, $37 hub, 0.55 tCO₂e/MWh ⇒ -$570,000 net gain, -$10.91/tCO₂e

FAQ

How should I source the avoided emissions factor?

Use the difference between the market-based residual emissions factor for your load and the project’s lifecycle emissions, referencing supplier-specific data or accredited LCA studies.

What does a negative cost per tonne mean?

A negative value indicates the VPPA generates net cash inflows while still delivering environmental attributes, effectively paying you per tonne of avoided emissions.

Should I include REC monetisation?

If you resell renewable energy certificates separately, subtract that revenue from the net cost before dividing by avoided tonnes to avoid double counting benefits.

Can I annualise multi-year settlements?

Yes. Input average annual volumes and expected price spreads for the relevant year. Repeat the calculation per year when projecting long-term VPPA performance.

Additional Information

  • Net VPPA cost equals strike price minus market price multiplied by the settled volume.
  • Avoided emissions derive from the delta between residual grid intensity and the project’s lifecycle emissions.
  • Risk discounts capture hedging reserves for basis, profile, and imbalance exposure.

Related calculators